2023 Technology Predictions for Innovative Startups

The convergence of inflation, new technologies and the ongoing talent crisis, is changing the playing field for technology start-ups. As these companies look to grow their businesses and protect their bottom line, many are investing in new approaches and technologies. Here, Mike O’Malley, SVP of SenecaGlobal, talks about recent trends and predictions for what is ahead in the start-up community. 

Changing regulations, new technologies, and a volatile economy are causing uncertainty and disruption for many start-ups. To survive and thrive, these companies must adapt and embrace technology advancements or risk being overtaken by more innovative competitors.

McKinseyOpens a new window reports that 84% of executives believe innovation is vital to their growth strategy. Innovation requires understanding what’s disrupting the status quo now and predicting future trends. Only then can start-ups figure out what resources they need to implement big ideas and take advantage of changing market conditions.

Based on my company’s experience working with emerging start-ups in healthcare tech, security tech, and fintech, we’ve seen certain trends emerge across the board. Here are my predictions of the hot technology trends and how they will impact organizations in 2023.

1. The IT Talent Shortage will Accelerate 

Despite the economic slowdown and layoffs in specific industries, we still see an unrelenting demand for certain high-demand tech skills. With our clients, we see this talent gap primarily in healthcare tech, security tech, and fintech start-ups. 

For example, many companies are trying to stay ahead of the more complex regulatory environment. They may be looking for specialized cybersecurity professionals with expertise in both data privacy and the law — essentially unicorns. People with this skill combination are so scarce and command such high compensation that, likely, only the top 1% of companies can even afford to hire them. Google highlights the importance of this issue in a recent panel at RSA conference that explores the legislative landscape, the risks that exist, and the operational realities of managing privacy within a complex digital environment. 

The labor volatility issue is creating significant issues for companies looking to drive initiatives and increase the time to market for products. The number of new startups entering the market last year broke the record as featured by the Economic Innovation Group. The competition for talent is even more challenging. I predict the trend to continue into 2023.

2. Startups to Focus on Security at the Onset

With countless cyber threats invading the internet and the attack landscape growing more complex, businesses that do not embrace security as a top priority do so at their own peril. Creating secure code needs to be a priority for software development teams. In 2023, we expect emerging companies to adopt this strategy by investing more in security from the onset of the initial software design, a process we like to call: PlanSecOps.

Compared to DevSecOps, where security is integrated into the code, PlanSecOps starts earlier in the development cycle, incorporating security at the planning stage before any code is written. PlanSecOps offers a security-by-design approach that is more holistic. For example, instead of fixing problems as they arise, different subroutines can be patched to ensure they work together. PlanSecOps can shorten the development cycle by weeks and produce more secure applications.

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3. SMBs will Ditch QuickBooks for Real-time Financials

With the economy slowing down and talks of a looming recession, many small and mid-sized businesses (SMBs) are growing concerned with the lack of visibility they have into the data that drives their business operations. In uncertain times, it’s challenging to run a business profitably, especially if you can’t make forecasts based on real-time financial data. According to Accenture, 76% of CFOs surveyedOpens a new window believe there needs to be “one version of the truth” to achieve business objectives. Yet so many SMBs run their companies on error-prone spreadsheets or QuickBooks, tools that do not meet the rigors of the financial analysis capabilities needed to make smart, strategic decisions. 

As we enter 2023, we will see a significant increase in SMBs transitioning from spreadsheet-based models or QuickBooks to cloud-based Enterprise Resource Planning (ERP) systems. Cloud ERPs streamline all of a business’s systems (such as accounting and financing) into one platform while automating data tracking and other essential accounting processes. SMBs realize that having an ERP system that can provide this kind of functionality is key to survival no matter the economic climate. 

4. Healthcare tech, Security tech, and Fintech Buck the Trend 

In Q3 2022, start-up fundingOpens a new window declined by over 50% due to higher interest rates, record inflation and concerns about an economic recession. However, we predict sectors like healthcare tech, security tech, and fintech will buck the trend and remain strong or grow even faster in 2023. 

We are already seeing this start to occur:

• Island, a cybersecurity start-up that provides a secure enterprise web browser, recently extended its Series B with a $60 million investment at a $1.3 billion valuation. This cash influx takes the total money raised by the company to $270 million.
• In Q3 2022, several digital health companiesOpens a new window raised large amounts of money in Series E+ rounds. While investors typically avoid later-stage and larger rounds, several health innovators are breaking the trend. In a Series G round of $150 million earlier this year, We Doctor, known for introducing China’s first internet-based hospital, was among the largest late-stage raisers.
• In fintech, Quona Capital, a DC venture fund, announced the close of its most recent fund at $322M VC fund for fintech companies, exceeding its initial target of $250 million and was fueled by new and existing investors.

All three of these sectors offer innovations based on a few common characteristics. They are based on cloud applications, place a high priority on security, and are designed to provide companies with the ability to tap tools like Artificial Intelligence and Machine Learning to gain new, competitive insights. As SMBs continue to transition to the cloud, we predict that investors will continue to fund visionary and innovative companies.

How are you enabling a culture of innovation in your organization? Are you keeping these tech trends in mind? Share with us on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window .

MORE ON 2023 PREDICTIONS: 

• Top IT Challenges and Trends for Businesses in 2023
• Cloud Security: 5 Predictions on What Lies Ahead for 2023
• The Top Cybersecurity Trends to Be Aware of in 2023 

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